Productivity growth essential for agriculture

Productivity growth will be vital for Australian agribusiness to be competitive on the global stage, Australian Bureau of Agricultural and Resource Economics (ABARES) Executive Director, Karen Schneider has told a CEDA audience in Brisbane.

“Productivity growth will be critical to expanding our production and exports to meet growing world food demand because competition on the supply side there is certainly going to be a lot of interest,” she said.

“The reallocation of resources towards the larger, more efficient farms has being a major contributor to productivity growth in agriculture and it’s being driven largely by the adoption of leading technologies.”

Ms Schneider said Latin America and the black sea region have a lot to gain from expanding their market share and improving productivity which will impact Australia.

Discussing investment, Ms Schneider said attracting capital into Australian agriculture will require competitive rates of return.

“The capacity to attract capital will depend on other factors too including the scale of investment that institutions are seeking,” she said.

She said large institutions such as superannuation funds are potential investors for Australian agribusiness.

“There aren’t insurmountable impediments to expanding the sourcing of financing available to Australian agriculture,” she said.

“Fundamentally the outlook for the agriculture sector I think is quite strong.”

“There are a number of issues in the short term such as lower interest rates, lower exchange rates, lower international oil prices that are helping to support that growth.”

Also speaking at the event Queensland Minister for Agriculture and Fisheries, the Hon. Bill Byrne said Australia is an attractive investment option.

“Our reputation as a reliable nation with stable governments and strong financial sectors and a producer of high quality, safer products gives us an advantage over many of our competitors,” he said.

“I truly believe that Queensland’s food and fibre sector is attractive as a supplier and as a solid investment for companies looking to buy into reliable supply chains.”

Mr Byrne said the sector needs significant investment to remain internationally competitive and exploit new markets.

“Realistically Australia is funded on foreign investment and we will continue to rely on it for our future prosperity,” he said.

Discussing exports, Mr Byrne said Australia is well-placed to expand supply to Asia’s emerging middle-class  market. 

“The idea that Australia is going to become Asia’s food bowl is not a realistic prospect,” he said.

Mr Byrne said Australia produces enough food for about 50 to 60 million people annually, even with the most advanced productivity gains it is unlikely Australia could meet the demand of the growing world population.

“We are well-suited to target niche markets going forward, particularly with the development in Asia but the idea that we are going to be a very very large player in the global scheme of things is not one that can be supported by evidence.”